100 Months of Jobs Growth

Feb 1, 2019   //   by Bruce Mason   //   Weekly Market Update  //  No Comments

It was another good week in the markets with lots of good earnings announcements and a Dow Jones Industrial Average reclaiming 25,000 for the first time since early December.  In fact, the month that just ended saw a large reversal of the selloff in December and marks the best January in the past thirty years.  The bulk of the news this week regarded earnings which came in as expected or better.  The few companies that missed analyst expectations or surprised investors with lowered future guidance were punished.  However, investors appear more forgiving this earnings season than most considering that expectations have come down considerably.

Aside from earnings announcements, the Federal Reserve met this week to discuss interest rate policy.  Having done a full 180-degree turn over the past two months, it should not come as a surprise that they held off raising interest rates at this meeting.  Perhaps the real surprise is that the hawkish Fed is turning into quite the dove, suggesting that not only could all rate hikes be off the table this year, but that it is considering an end to its balance sheet reduction program.  You’ll remember the Fed’s balance sheet grew to over $4 trillion during the financial crisis of 2008 due to quantitative easing aimed at stabilizing the economy.  It has spent the past year slowly reducing its balance sheet to the tune of approximately $50 billion per month.  Fed Chair, Jerome Powell, suggested it might have to reevaluate this unwinding which sent the markets higher.  A dovish Fed is not worth fighting.

The big news came today in the form of the jobs report which stated 304,000 jobs were created last month.  This now represents 100 months of job gains.  As might be expected, people who previously decided to leave the workforce are reentering the market pushing the labor participation rate up.  Additionally, the lack of available workers has pushed wages higher by 3.2%.  These indicators remain favorable, aside from the good earnings announcements mentioned above.

In company news, we heard from Walmart who is aggressively seeking to hire more truck drivers.  The company says it will pay an average of $87,500 per year to its truck drivers starting next month.  However, before you quit your job to embrace the open road, it should be noted self-driving trucks are in testing as we speak.  We also heard from Foxconn who said it might not build an LCD plant in Wisconsin after all.  However, breaking news this afternoon suggests this on-again, off-again deal appears on-again after President Trump reminded Foxconn of its commitments to both Wisconsin and the White House.  Time will tell if the economic reality trumps political pressure.  And lastly, T-Mobile and Sprint, who are trying to gain approval to merger, have announced it plans on hiring 5,600 additional employees in five new customer service centers spread throughout the country.  This comes as a bit of a surprise since most mergers seek to find synergies and aim to reduce costs.

In closing I admit I had a hard time coming up with this week’s story of the week.  I was so focused on the deluge of earnings announcements that I seemingly didn’t read much else.  However, I reached deep into my old stories file to come up with this one.  Last September, Merriam-Webster announced it would add 25 new words to the dictionary.  This isn’t an unusual event since new words are being created all the time.  However, codifying them into the dictionary gives these words, which might have previously been slang, more weight.  You’ll undoubtedly recognize many, although some may have you scratching your head.  I’ll give you five that I found fun:

  1. TL;DR (abbrev): “Too long; didn’t read – used to say that something would require too much time to read.”
  2. Adorbs (adj.): “Extremely charming or appealing; adorable.”
  3. Guac (n.): Guacamole
  4. Generation Z (n.): The generation of people born in the late 1990s and early 2000s.
  5. Hangry (adj.): “Irritable or angry because of hunger.”

Now you know.

February 1, 2019

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